THE Securities and Exchange Board of India (SEBI) today filed an affidavit before the Securities Appellate Tribunal (SAT) - as instructed by the latter - to show that it has fresh evidence to investigate whether the Birlas obtained management control when they acquired a 10.6 per cent stake in Larsen & Toubro from the Reliance group last year.

SAT is scheduled to hear the case tomorrow.

The details of the affidavit are not known. However, sources associated with the case said the affidavit was based on complaints received from the Investor Grievances Forum as well as from other investors.

There were 15 documents in the form of annexures to these complaints, said the sources. Though the contents of these complaints and documents were to be verified - prima facie, there appeared a case for investigation, they said.

The complaints received by SEBI allege that the Birlas did acquire management control in November 2001 itself, when they bought the Reliance group's stake in L&T and when, soon afterwards, the Chairman of the AV Birla group, Mr Kumar Mangalam Birla, as well as Ms. Rajashree Birla were appointed directors on the board of L&T.

It has been speculated that L&T's plans to shelve the demerger of its cement division into a separate company could be indicative of the Birlas having management control in L&T.

Sources close to the Birlas, however, insist the group has no management control at L&T. "The Birla directors have never told them to shelve their demerger plans," they said. Control indicated the right to appoint the majority of directors or the right to control the management on policy decisions neither of which happened, they said.

"The Birlas have only two directors on a board of 17. The recent proposal to revive the demerger of the cement division was given to our directors two hours before the board meeting of October 29 this year. It was an addendum to the agenda; how could the Birlas have management control if they did not even know about it," said sources.

They claimed their buyout of Reliance's stake was only a strategic investment.

"L&T and the Birlas have synergies in cement and also in areas such as information technology and knowledge management.

"It was thought this would also help the cement market to become more competitive and help keep out MNCs which were planning an Indian entry and which have deeper pockets than Indian cement companies."